Welcome to another edition of The Future of Automotive, with Steve Greenfield, Founder, and CEO of Automotive Ventures, where I put recent automotive and mobility news items into context, in terms of the broader thematic areas that will potentially impact the industry.
I’m glad that you could join us.
For this week’s show, I’m going to revisit one of the more important industry trends impacting the Future of Automotive, namely vehicle connectivity.
It was about five years ago that Tesla launched the Model 3. Consumer Reports reviewed the vehicle and gave it their worst rating, stating that the vehicle had worse braking characteristics than a Ford F-150 pickup truck.
A few days later, Tesla convinced them to retest the vehicle, and Consumer Reports was shocked to find that the same vehicle’s braking dynamics had improved significantly – reducing the 60 miles per hour to zero braking distance by 20 feet.
No technician had touched the car. The improved breaking dynamics where wholly because of Tesla pushing a software update to the vehicle via an Over the Air update.
This single event five years ago opened the world’s eyes to the potential of Over-the-Air updates (OTA). If Tesla could change the braking dynamics of a vehicle through a simple software update, what other vehicle features could be enhanced or unlocked via OTA updates?
Fast forward five years to today, and legacy automakers such as GM, Ford and Stellantis each have plans to deliver over $20 billion dollars of annual, recurring, high-margin software subscription revenue by 2030.
But to get there, they need to hire armies of software developers and do something that up until now OEMs haven’t been good at – namely building a competency around software development.
How are the automakers planning on generating billions of dollars of new revenue from consumers who are driving their cars? By unbundling vehicle features and offering consumer the ability to either pay upfront or by the month for options such as additional horsepower, extended battery range or rear heated seats.
This week we saw a new publication come out of Cox Automotive, who surveyed 2,000 in-market vehicle shoppers and published a body of work entitled, “Software Monetization: The Emergence of Vehicle Features on Demand (FoD).”
Key findings of the report include 41% of shoppers indicating that they are interested in Features on Demand.
Cox found that most shoppers see some benefit in the strategy, as a Features-on-Demand approach will provide vehicle buyers an opportunity to try out unfamiliar features without requiring a long-term commitment.
Shoppers also view Features-on-Demand as an opportunity to upgrade their vehicles.
It is noteworthy that most shoppers believe a top benefit of Features-on-Demand would be a lower starting vehicle price.
Sticking with the theme of Over-the Air-Updates, we saw additional news this week about how automaker and dealership fixed operations, or parts and service, might be effected by software pushes to the vehicle.
First up, consulting firm EY reported that vehicle recalls cost the industry $40 billion to $50 billion annually in recent years. And more than 40% of that cost is related to software.
These numbers are enormous, and as a result, the automakers have great hope that they’ll be able to avoid much of the cost of recalls if a good percentage of this work can be able to be conducted via OTA, rather than during in-dealership reimbursed visits.
We also heard this week from consulting firm ABI Research who believes that by 2028, automakers in the United States will use Over-the-Air (OTA) update capabilities to save $1.5 billion per year – by remotely implementing fixes to product recalls.
ABI noted that OEMs using Over-the-Air updates can centrally manage their vehicles on the road and push updates to the cars that need them, ensuring that they remain compliant and that none are missed. This can all be done without intervention from the drivers, improving customer experience scores.
If automakers are able to avoid a lot of costly recall work through the use of Over the Air updates, it’ll mean dealers see less of this work in their shops, and OEMs should ultimately become more profitable, as avoiding these costs will flow through to their bottom lines as enhanced profits.
Finally this week, on a lighter note, Scott Case, who is the CEO of Automotive Ventures portfolio company Recurrent, and I had a bit of fun with a bet on whether EVs will get to 50% of passenger car sales by the year 2030.
Scott took the “over” and I took the “under” on the bet, but I then conducted a poll on LinkedIn to see what our audience thinks.
Interestingly, an overwhelming majority of my LinkedIn audience, at 81%, believe that we won’t get to 50% EV penetration of new passenger vehicle sales by 2030.
So, there you have it. The audience has spoken.
Now we just have to wait until 2030 to see who wins the bet.
Companies To Watch
So with that, let’s transition To Our Companies To Watch.
Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my weekly Intel Report, which you can subscribe to for free, I showcase a couple of companies each week, and we take the opportunity here on this segment to share those companies with you.
This week we have two companies to watch: B2U Storage Solutions & Intelliports.
B2U Storage Solutions
Our first company to watch this week is B2U Storage Solutions.
What are we going to do with all of the EV batteries as they get down to 70% of their useful life? We surely don’t need these things filling up landfill sites.
B2U Storage Solutions is focusing on large-scale energy storage using 2nd-life EV batteries.
Their patented EV Pack Storage technology allows them to deploy EV batteries without repurposing costs in large scale stationary storage projects.
B2U’s EPS system enables EV batteries to be deployed in large-scale energy storage applications in their original pack casing, avoiding repurposing costs.
B2U’s energy storage facilities are interconnected near the site that needs the energy, providing electricity and grid services when they are needed most.
B2U Storage Solutions is an innovative early-stage company focused on the circular economy and how we’re going to repurpose used EV batteries at end of life.
You can check out B2U Storage Solutions at www.B2Uco.com.
Intelliports
Our second company to watch this week is Intelliports.
Inteliports is focusing on systems that will allow commercial drone operations to scale.
With big retailers like Amazon and Walmart investing in drone delivery of small packages, I don’t think it’s going to be long before you’ll be getting your Amazon deliveries within minutes, thanks to new drone technology.
But, we face a challenge – we’re going to need to figure out how we can safely allow these drones to drop off their precious and often valuable cargo.
Intelliports is building infrastructure solutions to bring future flight to ground, connecting communities and enabling end to end mobility.
Their solutions include innovative automated drone ports and payload delivery systems. Very space-age stuff.
You can check out Intelliports at www.Inteliports.com.
If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our new DealerFund.
If you’re a dealer who wants to invest in early-stage AutoTech companies that benefit your business, let me know. We are still accepting new investors into the DealerFund.
If you’re interested in joining our Investment Club to make direct investments into AutoTech and Mobility startups with small checks, join the Club. There is no obligation to start seeing our deal flow.
And don’t forget to check out my book, The Future of Automotive Retail, on Amazon.com.
Thank you for tuning into CBT News for this week’s Future of Automotive segment, and we’ll see you next week!
